JP Morgan Chase will bring most of its outsourced IT
with IBM back in-house as part of a $58bn (£32bn) acquisition of
Bank One.
Last year, JP Morgan Chase transferred management of its data
processing infrastructure and about 4,000 IT workers and
contractors to IBM under a seven-year, $5bn outsourcing
contract which was signed in late 2002.
But an IT manager at JP Morgan Chase said the bank planned to
begin talks aimed at restructuring the agreement with IBM once the
financial aspects of the Bank One acquisition are completed next
month.
"IBM will probably hold on to some of the services, but the bulk
of the work will be brought back in," the IT manager said. In
particular, bank officials may be willing to leave some IT
infrastructure-support responsibilities in IBM's hands, he
said.
A consultant who works closely with JP Morgan Chase said he has
been told that the bank wants to reclaim all of its network support
activities "but allow IBM to continue to manage some of the
datacentre infrastructure work" now handled by the company.
Tom Johnson, a spokesman for JP Morgan Chase, said the bank
could not comment on future negotiations, however, he did confirm
that JP Morgan Chase and Bank One planned to complete the
acquisition in July. Merging the operations of the two banks is
expected to take until 2007.
It was unclear whether there is any dissatisfaction among JP
Morgan executives about IBM's performance, or if any move to reduce
the scope of the outsourcing deal is related only to the Bank One
acquisition. But a rethinking of the contract with IBM has been
seen as a possibility since the merger plan was announced in
January.
Bank One has brought most of its IT operations back in-house
since late 2001 as part of an initiative spearheaded by chief
executive officer James Dimon and managed by chief information
officer Austin Adams.
Both Adams and JP Morgan Chase chier information officer John
Schmidlin will be members of the combined bank's executive
committee.
Thomas Hoffman writes for Computerworld